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RANsquawk EU Open Rundown 02.08.17

Asian equities trade mostly higher following gains on Wall Street and Apple’s stellar after-market earnings

USD nursed some of its recent losses with the DXY back above 93.00. Commodity-linked currencies felt the brunt of the weakness in oil

Looking ahead, highlights include US ADP, DoEs, Fed’s Mester and Williams

ASIA

Asian stocks traded mostly higher as the region took the impetus from Wall Street’s gains where the DJIA homed in on the 22,000 level and NASDAQ futures surged after-market following Apple’s (+5% after-market) strong Q3 earnings. This supported the Apple supply chain and resulted to outperformance of the TAIEX (+0.7%), while Nikkei 225 (+0.6%) was underpinned by a weaker currency. Conversely, losses in the commodities complex and financials weighed on ASX200 (-0.4%), while Shanghai Comp (+0.1%) was indecisive and traded choppy due to a lack of drivers and a reduced liquidity operation by the PBoC. Finally, 10y JGBs were relatively flat amid the positive risk tone in Japan with only mild gains seen following a respectable Rinban announcement in which the BoJ are in the market for over JPY 1tln JGBs ranging from 1y to 10y maturities.

PBoC injected CNY 90bln via 7-day reverse repos and CNY 30bln via 14-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.7205 (Prev. 6.7148)

EUROPE/UK

UK BRC Shop Price Index (Jul) Y/Y -0.4% (Prev. -0.3%). (Newswires)

NIESR forecasts UK GDP growth at 1.7% for 2017 and 1.9% for 2018. (Newswires)

FX

USD nursed some of its recent losses with the DXY back above 93.00, alongside gains in USD/JPY after the pair eventually broke tspanough yesterday’s resistance at 110.60. Commodity-linked currencies felt the brunt of the weakness in oil after WTI fell below USD 49/bbl, with NZD the worst performer among its G10 counterparts after Employment Change disappointed and printed an unexcepted Q/Q contraction.

New Zealand Employment Change (Q2) Q/Q -0.2% vs. Exp. 0.7% (Prev. 1.2%)

New Zealand Employment Change (Q2) Y/Y 3.1% vs. Exp. 4.1% (Prev. 5.7%)

New Zealand Unemployment Rate (Q2) 4.8% vs. Exp. 4.8% (Prev. 4.9%)

COMMODITIES

WTI crude futures were drilled below USD 49/bbl following a surprise build in API inventories and a survey which suggested OPEC supply rose in July. Elsewhere, gold (-0.3%) retreated from near 8-week highs amid profit taking and with the safe-haven also dampened by the increased risk appetite, while copper prices were also lower alongside the broad-based weakness across the commodities complex.

US API Crude Oil Inventory Report (Jul 28) W/W 1779K (Prev. -10200K). (Newswires)

US

The US afternoon was relatively quiet for Treasuries, despite decent enough volume on the day as 10-year US yields flirted around 2.25% as notes consolidated their gains. Eyes have been on the longer end of the corporate issuance space, with decent supply noted on that front. Sep’17 10y T-note futures settled at 126.07+, up 11 ticks.

Apple Inc (AAPL) Q3 EPS USD 1.67 vs. Exp. USD 1.57, revenue USD 45.41bln vs. Exp. USD 44.89bln. (Newswires)

- iPhone unit sales 41.0mln vs. Prev. 40.4mln Y/Y.

- iPad unit sales 11.42mln vs. Prev. 10mln Y/Y.

The Trump administration is considering its first significant trade action against China with a probe of China’s intellectual property regime. (FT)
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MOC: * SPX 850mln to sell (vs at 650mln to sell at 1549 EDT) * Dow 50mln to sell (vs 100mln to buy at 1549 EDT)